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TMI Blog2022 (6) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Adjudicating Authority holding that the Appellant had defaulted in paying the R-1 i.e. Central Bank of India (CBI) under the loan documentation. 3. The aforesaid direction would cause grave prejudice to the Appellant the same is fatal to the functioning of the Appellant. The fact of the case as stated by the Ld. Sr. Counsel for the Appellant are as follows: (a) The Respondent No. 1/CBI has claimed an amount of Rs. 185,35,24,319/- as amount due to them from Corporate Debtor/R-2 towards the loan advance by them. The R-1/CBI in support of its claim has relied on the loan agreement and the application filed by it before DRT against the demand notice dated 29.09.2018 and 05.10.2018 from the R-1/CBI. (b) The Appellant vide its letter dated 12.10.2018 denied the allegations made therein and thus raising a dispute. (c) The Appellant approached the R-1 for a One Time Settlement (OTS) and paid an amount of Rs. 10 Crores to the R-1. The said Settlement Proposal was accepted by the R-1 vide its sanction letter dated 28.01.2019 and consequently R-1 withdraw the Company Petition on 31.01.2019. (d) Respondent No. 1 once again filed Company Petition No. 3794 of 2019 before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record and also the fact that they were willing to make payment of the interest on the delayed period. However, the Hon'ble Bench refused to hear the Appellant. Further due to certain technical snag, the Appellant and their counsel were removed from the Virtual hearing. The Appellants immediately called up the helpline available on the Virtual Hearing portal, however, since there was no response, the Appellant were compelled to place the aforesaid facts to the Registry of the Hon'ble Tribunal and requested for re-entry into the hearing however were not allowed to re-enter the same. (k) It is relevant to mention herein that though the order was passed on 16.07.2021, the Appellant was informed about the same on 22.07.2021 when it was uploaded on the website. (l) The Appellants further state that the R-2 has subsidiary companies which are completely relying on the business of the R-2 and upon passing of the impugned order for CIRP of Corporate Debtor, these subsidiary companies have come to an abrupt stand still thus affecting of the working of not only the Appellants but for all its subsidiary companies. 4. The Crucial dates and events as presented by the Ld. Sr. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time to time. 10. 25.02.2022 By way of its final judgment, this Hon'ble Supreme Court was pleased to make the stay order absolute until the pendency of the present Appeal before this Hon'ble Court. 5. Reliance is placed on the celebrated case of "Swadeshi Cotton Mills vs UOI (1981) 1 SCC 664" (paras 26-30). The Hon'ble Madras High Court has also in "Shree Krishna Educational Trust vs Government of TN 2016 SCC" Online Mad 2011 5 (para 6.12 to 6.17) succinctly laid down the components of a fair hearing which have not been complied with in the present case. The principles of natural justice are embedded in the Indian legal jurisprudence. In "Maneka Gandhi vs. Union of India (1978) 1 SCC 248", the Hon'ble Supreme Court has held "... The court must make every effort to salvage this cardinal rule to the maximum extent permissible in a given case. It must not be forgotten that "natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances". The audi alteram partem rule is not cast in a rigid mould and judicial decisions establish that it may suffer situational modifications. The core of it must, however, remain, namely, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent Bank is receding to accept the OTS amount which will expose the other financial creditors who would be condemned to huge losses. 10. However, the Adjudicating Authority vide its order dated 16.07.2021 in CP No. 3794/IBC/MB/2019 has observed the followings: "1. The Corporate Debtor, except putting up appearance through Shri Akshay Patil, advocate even did not chose to file any reply in the above matter. The above Company Petition is nothing but a second round of litigation. The earlier company petition bearing no. 4086 of 2018 was withdrawn by the applicant on account of OTS (One Time Settlement) sanctioned to the Corporate Debtor. Except paying upfront amount of 10 crores, the Corporate Debtor did not adhere to the compliance of the remaining terms of the OTS despite availing nearly two years' time. 2. Thus, the debt and default are admitted in this case and the debt is also within limitation. The application is complete in all respects and the Financial Creditor also suggested the name of Mr. Vijay Pitamber Lulla as Interim Resolution Professional along with his consent letter in Form II. Thus, the present Company Petition satisfies all the necessary legal requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.08.2021, the Hon'ble Supreme Court of India by its order dated 27.08.2021 was pleased to stay on further proceedings in the CIRP for a period of 8 weeks from the date of the order. (h) That on learning of the order dated 27.08.2021, the IRP wrote an email dated 28.08.2021 to the CoC members and informed them of the said development and also to the erstwhile management. The erstwhile management vide its email dated 30.08.2021 contended that the IRP cannot remain in control and management of the Corporate Debtor and that he should hand over the management. (i) Thereafter the R-2 vide its email dated 01.09.2021 replied that the Hon'ble Supreme Court order dated 27.08.2021 clearly stated that there shall be a stay of further proceedings for a period of 8 weeks from today, which implies that no further steps to be taken in connection with the CIR Process. The stage at which the CIRP has reached should remain the same. At this stage the IRP has been appointed and CoC has been constituted and the first CoC meeting was held and adjourned and therefore no further steps will be taken in the CIRP. The IRP further states that, based on the legal advice received and after considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 crores sanctioned by R1 bank to the CD [@pg. 57-58] 2. 31.03.2015 CD account was declared as NPA[pg. 507,Appeal Vol. 2] 3. 30.06.2017 CD acknowledged an amount or INR 95,27,86,406/- was due to R1 Bank as of 30.06.2017 [pg 442, Appeal Vol. 2] 4. 28.01.2019 R1 Bank sanctioned 1st OTS and CD was required to pay Rs. 93.18 crores within 90 days. Further, it was agreed to inform the concerned authority who categorized the CD's account as fraud at RBI of the acceptance of the OTS [pg 53-54, Appeal Vol. 1] 5. 17.06.2019 R1 Bank rescinded the 1st OTS since except payment of upfront 10% amount, CD failed to pay balance 83.18 crores [pg. 517, Appeal Vol. 2] 6. 13.08.2019 Insolvency Application was filed by R1 Bank u/s 7 of the Code for default in payment of Rs. 185,53,24,319/- [pg. 55-64, Appeal Vol. 1] 7. 03.12.2019 Adjudicating Authority granted time to CD to file a reply [pg. 56, reply Vol.] 8. 24.01.2020 CD sent 2nd OTS offer to pay Rs. 40 crores on or before 31.03.2020[pg. 573, Appeal Vol.3] 9. 13.03.2020 R1 Bank sanctioned 2nd OTS and it was clearly stated therein the DRT/NCLT proceedings shall be withdrawn only on payment of entire settlement amount. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal vol.3] iii. The Adjudicating Authority's order dated 08.07.2021 records that the parties were heard [pg. 58, reply Vol.] iv. the Appellant suppressed the cause list for 08.07.2021 and the order dated 08.07.2021 while filing the present appeal. v. No application or sworn affidavit has been filed by the counsel for the Appellant/CD alongwith the present Appeal stating that he was removed from the hearing and was not given any opportunity to present the case. vi. Assuming without admitting that the Appellant/CD's counsel was not heard by the Adjudicating Authority, then the Appellant may have immediately approached this Hon'ble Appellate Tribunal challenging the order dated 08.07.2021, but no such appeal was filed. Furthermore, no steps were by the Appellant to file any application for recall of the order dated 08.07.2021 or for re-opening the arguments before the Adjudicating Authority; vii. Only after the Adjudicating Authority had passed a judgment dated 16.07.2021 admitting the Insolvency Application, the Appellant belatedly filed the present Company Appeal on 09.08.2021 challenging the order dated 16.07.2021. (B) It was also stated by Ld. Counsel of R-1/CBI tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has not acknowledged the specified amount i.e. approximately Rs. 95 Crore due to the Respondent No. 1/CBI as on 30.06.2017. (d) The parties both the Financial Creditors/Respondent No. 1 and Corporate Debtor/Appellant is not denying that an OTS was not sanctioned on 28.01.2019 and the same was rescinded by the Bank on 17.06.2019. The Corporate Debtor failed to pay balance Rs. 83.18 Crore out of OTS sanctioned of Rs. 93.18 Crore and hence only Rs. 10 Crore was paid by the Corporate Debtor/ Appellant to the Bank. (e) What it is observed that the Respondent No.1/Bank sanctioned 2nd OTS on 13.03.2020 for an amount of Rs. 40 Crore and out of which only Rs. 4 crore was paid by the Corporate Debtor/Appellant to the Respondent No.1/Bank. (2) From the above it is very much clear that the debt is neither barred by the limitation nor it is barred by the provision of Section 10(A) of the IBC, 2016 as the bank has filed the petition on 13.08.2019. (3) The record also revealed that the Respondent No.1/CBI/FC has filed the Petition for initiation of CIRP originally on 22.10.2018 but before the admission of the said application, the Corporate Debtor has approached the Respondent No.1/Bank f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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